Agios Pharmaceuticals, Inc. — Q1 2018 Form 10-Q
Reporting period: Three months ended March 31, 2018. Agios is a clinical-stage biopharmaceutical company focused on cellular metabolism in cancer and rare genetic diseases. IDHIFA is its first commercial product, marketed by collaboration partner Celgene; Agios reported no product-sales revenue.
Financial performance and position
| Metric | Q1 2018 | Q1 2017 / comparison |
|---|---|---|
| Total revenue | $8.8 million | $10.5 million; down 17% |
| Research and development expense | $78.2 million | $62.7 million; up 25% |
| General and administrative expense | $24.6 million | $14.8 million; up 66% |
| Net loss | $90.8 million; $1.63 per share | $66.2 million; $1.56 per share |
| Operating cash used | $99.0 million | $74.1 million |
| Cash, cash equivalents and marketable securities | $994.7 million | $567.8 million at December 31, 2017 |
Revenue included $7.3 million of Celgene collaboration revenue and $1.4 million of IDHIFA royalties. Interest income was $3.2 million, versus $0.9 million a year earlier. Accumulated deficit was $849.4 million. The balance sheet reports no debt; total liabilities were $174.5 million and stockholders’ equity was $865.6 million.
Material changes and unusual items
- Agios raised $516.2 million net in a January public offering of 8.15 million shares, materially increasing cash and share count.
- Adoption of ASC 606 reduced Q1 collaboration revenue by $2.6 million and increased net loss by $3.0 million compared with the amounts that would have been reported under the prior revenue standard. The transition also reduced deferred revenue and adjusted opening accumulated deficit.
- Operating expenses rose as clinical programs advanced and the company expanded commercial and support capabilities. G&A growth primarily reflected preparation for a potential TIBSOVO launch.
- Investing cash outflow of $167.5 million largely reflected purchases of marketable securities, not solely operating investment.
Outlook, programs and risks
- Management expected existing cash, investments, anticipated product and royalty revenue, interest income and collaboration reimbursements—excluding additional program-specific milestones—to fund operations and capital needs through at least the end of 2020. Separately, the filing states resources were sufficient for at least the next 12 months.
- Agios expected R&D and operating losses to continue and expenses to increase as trials and potential commercialization advance. No profitability guidance was provided.
- TIBSOVO’s U.S. NDA for IDH1-mutated relapsed/refractory AML had priority review with an August 21, 2018 FDA action date; an EU application was planned for Q4 2018.
- AG-348 pivotal trials were beginning or planned for 2018; a thalassemia proof-of-concept trial was planned for Q4. The AG-270 phase 1 trial began in March 2018, and an AG-636 IND was planned for Q4.
- Key risks include clinical and regulatory uncertainty, patient enrollment, safety, manufacturing and commercialization execution, reliance on Celgene and other third parties, competition, intellectual-property protection, and the possibility that financing needs exceed expectations. Future equity financing could dilute shareholders.
- The portfolio was exposed to interest-rate movements and foreign currency fluctuations; Agios did not hedge foreign exchange risk. Management reported disclosure controls were effective and no material change in internal control over financial reporting during the quarter.
Investor verification priorities
- Track the TIBSOVO FDA review and planned EMA filing, as well as clinical enrollment, results and timing across lead programs.
- Monitor quarterly operating cash burn, the composition and liquidity of the $994.7 million portfolio, and whether the stated runway assumptions remain achievable.
- Reconcile collaboration revenue and deferred revenue under ASC 606, including the timing of remaining performance obligations and potential Celgene payments.
- Assess growth in R&D, launch-related G&A, share-based compensation and dilution following the offering.
- Verify Celgene’s development and commercialization commitments, IDHIFA royalty trends, and any changes to collaboration terms or program milestones.